The FTSE 100 has a reputation for being low growth and stodgy, dominated by large mining companies and financials. While partially true, there are also some faster growing ‘gems’ hiding in plain sight.
This article identifies a selection of companies which have consistently grown earnings at more than a double-digit rate for two decades. These companies’ growth rates may not be as exciting as Nvidia’s, but their collective investment returns have been more than satisfactory.
Why invest in growth companies?
One of the key advantages of investing in stocks is that the best businesses can compound earnings for a long time which can significantly increase their value.
Here’s a quick illustration of how it works. Imagine two people put £1,000 into a bank account with one paying 4% and the other 15% a year. Both accounts automatically reinvest the interest.
In year one you earn interest on the original money, in year two you earn interest on the original money plus last year’s interest, and in year three you earn interest on all of it again, and so on.
This ‘interest earning interest’ is the compounding bit and it can very powerful. After 20 years the 4% account is worth £2,190 but the 15% account is worth £16,370, roughly eight times more.
In the same way, a business reinvesting profits at high returns of 15% to 20% for decades behaves very differently from one growing at 3% to 5% (the average).
As Fundsmith founder Terry Smith is fond of reminding investors, stock prices follow profits over the long run. This is why investors seek out companies with higher-than-average earnings growth.
Are there any downsides?
Growth companies tend to reinvest profits back into the business, so do not always pay a dividend. This means investors must rely on the share price reflecting earnings growth.
One potential banana skin to be aware of is overpaying for growth which subsequently falls short of expectations.
The good news is that over longer timeframes valuation metrics like the PE (price to earnings) ratio become a less important component of total investment return.
As the table shows, Smith’s contention that earnings drive share prices is broadly true with total shareholder returns (share price gain plus reinvested dividends) closely matching earnings growth.
Interestingly, a lot of the companies in the table have also paid dividends along the way, contributing to total return.
The fastest earnings grower over the last two decades is specialty insurance company Beazley, which operates across cyber, marine and aviation.
Shareholders approved the $10.9 billion takeover by Swiss insurance giant Zurich Insurance in April.
Can JD Sports Fashion regain its stride?
Once considered by the market as a quality compounder, the self-proclaimed ‘King of Trainers’ has been buffeted recently by inconsistent like-for-like sales growth amid weaker consumer demand.
At its full year results on 7 May, the sportwear retailer said it expects a fourth consecutive year of falling profits in 2027 reflecting ‘muted’ market growth, although it announced a 20% uplift in the total dividend.
JD announced a new three-year cumulative free cash flow target of over £1.4 billion underpinned by profit growth and said it expects to return to sales growth.
How LSEG has become more predicable
People may think of London Stock Exchange Group purely as an exchange but since the 2019 acquisition of Refinitiv, the company has become global financial data analytics and infrastructure business.
As the chart shows the total return has performed in line with long term earnings growth at a steady double-digit percentage clip.
Roughly three quarters of revenues are now recurring in nature and subscription based, which provides greater visibility. Cost synergies have exceeded targets as the integration of Refinitiv has been smoother than expected.
After reporting a record first quarter 2026 management said revenue growth is expected to be in the upper half of its 6.5% to 7.5% range and confirmed the company was on track to return £3 billion to shareholders via buybacks.
Halma – the quiet compounder
Halma is unusual in that it is a decentralised group of dozens of niche technology companies operating across fire detection, water quality monitoring, elevator safety sensors and UV disinfection systems.
What connects all the businesses is they make mission-critical products where customers care more about reliability than price and switching costs can be meaningful, while regulation supports structural demand.
These factors add up to favourable economics supported by steady growth, healthy margins and good pricing power.
Halma’s second-half trading update on 12 March showed the company is on track to deliver its 23rd consecutive year of record adjusted profit and mid-teens percentage organic revenue growth.
Martin Gamble: Shares and Markets Writer
Martin Gamble is Shares and Markets writer at AJ Bell. He was previously the Education Editor of Shares Magazine. He has been with the business since 2019.
Martin graduated from the University of Kent in...
